CALGARY, Alberta, April 23, 2025 (GLOBE NEWSWIRE) -- This news release contains "forward-looking information and statements” within the meaning of applicable securities laws. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Cautionary Statement Regarding Forward-Looking Information and Statements” later in this news release. This news release contains references to certain Financial Measures and Ratios, including Adjusted EBITDA (earnings before income taxes, gain on investments and other assets, finance charges, foreign exchange, gain on asset disposals and depreciation and amortization), Funds Provided by (Used in) Operations, Net Capital Spending, Working Capital and Total Long-term Financial Liabilities. These terms do not have standardized meanings prescribed under International Financial Reporting Standards (IFRS) Accounting Standards and may not be comparable to similar measures used by other companies. See "Financial Measures and Ratios” later in this news release.
Precision Drilling Corporation ("Precision" or the "Company") (TSX:PD; NYSE:PDS) announces 2025 first quarter results, confirms shareholder return targets, and lowers 2025 capital budget.
Financial Highlights
- Revenue in the first quarter was $496 million compared to $528 million realized in the same period last year as strong drilling activity in Canada was offset by lower U.S. drilling activity.
- Adjusted EBITDA(1) was $137 million and included $3 million of restructuring costs and $3 million of share-based compensation expense. In 2024, first quarter Adjusted EBITDA(1) was $143 million and included share-based compensation expense of $23 million.
- First quarter net earnings attributable to shareholders was $35 million or $2.52 per share and comparable to $37 million or $2.53 per share in 2024. Precision has consistently delivered positive net earnings since mid-2022.
- Cash provided by operations during the quarter was $63 million, allowing the Company to repurchase $31 million of common shares and repay $17 million of debt.
- Capital expenditures were $60 million and the Company has lowered its 2025 capital budget to $200 million versus the $225 million previously announced.
- Precision remains committed to repaying at least $100 million of debt in 2025 and allocating 35% to 45% of free cash flow, before debt repayments, to share buybacks.
- Canada's activity averaged 74 drilling rigs in the first quarter and surpassed the 73 active rigs in the same period last year.
- Canadian revenue per utilization day was $35,601 and comparable to the $35,596 in the first quarter of 2024.
- U.S. activity averaged 30 drilling rigs compared to 38 in the same period last year.
- U.S. revenue per utilization day was US$33,157, which included US$1,263 per utilization day for idle but contracted rig revenue, versus US$32,867 in the first quarter of last year.
- Internationally, we had eight rigs active in the first quarter, consistent with the first quarter of 2024, and realized revenue of US$36 million compared to US$38 million in 2024.
- Service rig operating hours decreased 10% compared to the same quarter last year due to customer project deferrals and impacts of an earlier spring break up in Canada, plus lower U.S. activity.
(1) See "FINANCIAL MEASURES AND RATIOS."
"I am pleased with Precision's first quarter financial and operational results, and particularly with the efforts of the Precision team as we manage our way through a period of unusual volatility and market uncertainty. In the first quarter, our net earnings attributable to shareholders was $35 million, marking 11 consecutive quarters of positive earnings, and we are well on our way to meeting our capital allocation targets. During the quarter, we generated $63 million of cash provided by operations, allowing us to repay $17 million of debt and purchase $31 million of shares. Over the last four quarters, Precision has reduced its outstanding shares by nearly one million shares, representing 7% of our outstanding balance.
"During the first quarter our Canadian drilling activity remained slightly higher than last year, averaging 74 active rigs compared to 73 in 2024 and we expect this trend to continue through the first half of this year. In the U.S., we have modestly increased our activity levels from the fourth quarter, currently operating 34 rigs, primarily by capitalizing on the emerging opportunities in natural gas plays. With initial Liquefied Natural Gas (LNG) exports beginning shortly in Canada and significant LNG export capacity expansion underway in the U.S., we believe our market positioning for these increasing LNG opportunities is constructive.
"Second-half industry activity in North America will depend largely on customer realized cash flows and their capital allocation priorities. We believe industry capital discipline will remain a stabilizing market feature muting our customers' short-term response to volatile commodity prices. However, global events and conflicts, including unexpected OPEC+ production increases, trade and tariff uncertainty, and geopolitical conflicts have the potential to impact global economic growth and access to commodity supplies, creating a range of commodity price scenarios which are difficult to predict.
"Tightly controlling all aspects of our business, adjusting spending and specifically managing Precision's cash inflows and outflows at a pace that matches the cyclicality of our industry is a cornerstone of Precision's business model. We are reducing our 2025 capital spending by $25 million to $200 million to mitigate increased market uncertainty and a potential reduction in customer demand. This includes trimming our expected upgrade spending by approximately $8 million and maintenance capital by $17 million. We remain poised to further adjust capital spending in response to actual customer demand.
"We have also reduced our fixed costs by approximately $10 million annually by streamlining our internal structure and focusing more directly on customer needs and aligning with current activity levels. These changes included flattening our operations leadership structure, exiting our North Dakota well-servicing business and reducing the related staffing levels.
"Our International drilling operations and Completion and Production business both contributed meaningful free cash flow for the quarter, and this is expected to continue for the rest of the year.
"With a predominantly variable cost business and low debt levels, a highly experienced team committed to serving our customers, and a high-performance rig fleet, Precision is better positioned than any time in the past decade to navigate uncertainty while simultaneously creating shareholder value," concluded Mr. Neveu.
SELECT FINANCIAL AND OPERATING INFORMATION
Financial Highlights
| For the three months ended March 31, | |||||||||||
| (Stated in thousands of Canadian dollars, except per share amounts) | 2025 | 2024 | % Change | ||||||||
| Revenue | 496,331 | 527,788 | (6.0 | ) | |||||||
| Adjusted EBITDA(1) | 137,497 | 143,149 | (3.9 | ) | |||||||
| Net earnings | 34,947 | 36,516 | (4.3 | ) | |||||||
| Net earnings attributable to shareholders | 34,511 | 36,516 | (5.5 | ) | |||||||
| Cash provided by operations | 63,419 | 65,543 | (3.2 | ) | |||||||
| Funds provided by operations(1) | 109,842 | 117,765 | (6.7 | ) | |||||||
| Cash used in investing activities | 57,202 | 75,237 | (24.0 | ) | |||||||
| Capital spending by spend category(1) | |||||||||||
| Expansion and upgrade | 19,546 | 14,370 | 36.0 | ||||||||
| Maintenance and infrastructure | 40,419 | 41,157 | (1.8 | ) | |||||||
| Proceeds on sale | (3,765 | ) | (5,186 | ) | (27.4 | ) | |||||
| Net capital spending(1) | 56,200 | 50,341 | 11.6 | ||||||||
| Net earnings attributable to shareholders per share : | |||||||||||
| Basic | 2.52 | 2.53 | (0.4 | ) | |||||||
| Diluted | 2.20 | 2.53 | (13.0 | ) | |||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 13,683 | 14,407 | (5.0 | ) | |||||||
| Diluted | 14,287 | 14,410 | (0.9 | ) | |||||||
Operating Highlights
| For the three months ended March 31, | |||||||||||
| 2025 | 2024 | % Change | |||||||||
| Contract drilling rig fleet | 215 | 214 | 0.5 | ||||||||
| Drilling rig utilization days: | |||||||||||
| Canada | 6,680 | 6,617 | 1.0 | ||||||||
| U.S. | 2,691 | 3,453 | (22.1 | ) | |||||||
| International | 720 | 728 | (1.1 | ) | |||||||
| Revenue per utilization day: | |||||||||||
| Canada (Cdn$) | 35,601 | 35,596 | 0.0 | ||||||||
| U.S. (US$) | 33,157 | 32,867 | 0.9 | ||||||||
| International (US$) | 49,419 | 52,808 | (6.4 | ) | |||||||
| Operating costs per utilization day: | |||||||||||
| Canada (Cdn$) | 20,822 | 19,959 | 4.3 | ||||||||
| U.S. (US$) | 23,568 | 21,719 | 8.5 | ||||||||
| Service rig fleet | 153 | 183 | (16.4 | ) | |||||||
| Service rig operating hours | 66,986 | 74,505 | (10.1 | ) | |||||||
Drilling Activity
| Average for the quarter ended 2024 | Average for the quarter ended 2025 | ||||||||||||||||||
| Mar. 31 | June 30 | Sept. 30 | Dec. 31 | Mar. 31 | |||||||||||||||
| Average Precision active rig count(1): | |||||||||||||||||||
| Canada | 73 | 49 | 72 | 65 | 74 | ||||||||||||||
| U.S. | 38 | 36 | 35 | 34 | 30 | ||||||||||||||
| International | 8 | 8 | 8 | 8 | 8 | ||||||||||||||
| Total | 119 | 93 | 115 | 107 | 112 | ||||||||||||||
Financial Position
| (Stated in thousands of Canadian dollars, except ratios) | March 31, 2025 | December 31, 2024 | |||||
| Working capital(1) | (45,033 | ) | 162,592 | ||||
| Cash | 28,245 | 73,771 | |||||
| Long-term debt | 567,824 | 812,469 | |||||
| Total long-term financial liabilities(1) | 632,369 | 888,173 | |||||
| Total assets | 2,915,984 | 2,956,315 | |||||
| Long-term debt to long-term debt plus equity ratio(1) | 0.25 | 0.33 | |||||
Summary for the three months ended March 31, 2025:
- Revenue was $496 million compared to $528 million in the first quarter of 2024 as strong drilling activity in Canada was offset by lower U.S. drilling activity.
- Adjusted EBITDA decreased to $137 million from $143 million, primarily due to lower drilling activity in the U.S. and restructuring costs of $3 million that were partially offset by lower share-based compensation expense. Please refer to "Other Items” later in this news release for additional information on share-based compensation.
- Adjusted EBITDA as a percentage of revenue was relatively stable at 28% compared to 27% in 2024.
- Net earnings attributable to shareholders was $35 million or $2.52 per share and comparable with $37 million or $2.53 per share for the same period last year. On a diluted basis, net earnings attributable to shareholders was $2.20 versus $2.53 in 2024.
- Cash provided by operations was $63 million, allowing the Company to repurchase 408,973 shares for $31 million, reduce debt by $17 million by repaying the outstanding balance on the Senior Credit Facility, and end the quarter with $28 million of cash and almost $550 million of available liquidity.
- In Canada, revenue per utilization day was $35,601, consistent with the first quarter of 2024. Canadian operating costs per utilization day increased 4% to $20,822, mainly due to wage increases and Super Single rig reactivations. First quarter revenue and operating costs per utilization day were consistent with the fourth quarter of 2024.
- In the U.S. revenue per utilization day, excluding idle but contracted rig revenue of US$1,263, was US$31,894 compared with US$32,867 in the first quarter of last year. First quarter revenue per utilization day, excluding idle but contracted rig revenue, increased by 4% from the fourth quarter of 2024.
- U.S. operating costs per utilization day increased 9% to US$23,568 compared to the same quarter last year due to higher mobilization costs, additional rig reactivations, and fixed costs being spread over fewer activity days. These same factors caused operating costs per utilization per day in the first quarter to rise 9% compared to the fourth quarter of 2024.
- Internationally, we realized revenue of US$36 million from eight active drilling rigs, which is similar to the US$38 million generated in the first quarter of 2024.
- Completion and Production Services revenue was $79 million, a decrease of $8 million from 2024, as service rig operating hours decreased 10% due to a number of customer project deferrals and an earlier spring break up in Canada, plus less activity in the U.S. Adjusted EBITDA was $18 million, representing 22% of revenue compared to 21% in the first quarter of 2024.
- General and administrative expenses were $30 million compared with $45 million in the first quarter of 2024 primarily due to lower share-based compensation expense.
- Capital expenditures increased slightly to $60 million versus $56 million in 2024 and by spend category included $40 million for the maintenance of existing assets, infrastructure, and intangible assets and $20 million for expansion and upgrades. Precision has lowered its 2025 capital budget to $200 million.
Precision's vision is to be globally recognized as the High Performance, High Value provider of land drilling services. We work toward this vision by defining and measuring our results against strategic priorities that we establish at the beginning of every year.
Precision's 2025 strategic priorities and the progress made during the first quarter are as follows:
- Maximize free cash flow through disciplined capital deployment and strict cost management.
- Generated cash from operations of $63 million, allowing the Company to reduce debt and buy back shares.
- Proactively reduced fixed cost structure to address market uncertainty and expect to realize approximately $10 million in annual savings.
- Reduced our 2025 capital budget to $200 million versus the $225 million previously announced.
- Enhance shareholder returns through debt reduction and share repurchases. Plan to reduce debt by at least $100 million and allocate 35% to 45% of free cash flow before d